Ireland's boom ends – with a vengeance
Protests and anger grow as 'Celtic Tiger's' economy takes nosedive.
For nearly a decade, Ireland enjoyed a steady rise to one of the world’s hottest economies. In just a few short months, though, the nation has cooled to a near freezing-point. And with each passing day, the situation grows more dire.Skip to next paragraph
Subscribe Today to the Monitor
Iconic native businesses, like Waterford Crystal, have shut up shop. Multinationals, such as Dell, are relocating to low-wage economies in eastern Europe. Banks are being raided and taken over by the government.
Ireland’s downfall is proving to be as dramatic as its recent rise. Not long ago, it was a backwater languishing on the fringes of Europe, but Ireland’s educated and English-speaking workforce and low tax rates transformed it into a powerhouse that acted as a bridge between the United States and markets in the European Union. Until last year, the country enjoyed a decade of near continuous economic growth, earning it the nickname “the Celtic Tiger.”
As the economy grew, house construction boomed, bringing with it an overheated property market. Banks responded with easy mortgages. Personal debt ballooned. Now that finance has dried up, the construction sector has atrophied, and jobs are starting to be lost across the economy.
As the people of Iceland have already discovered, the winds of recession blow hardest in countries with small populations and narrow economic bases.
Professor Murphy, who thinks the economy will eventually recover, blames the problem on exuberance in the property market: “Standards of living went up in the 1990s and people felt that the way to become really wealthy was to start exchanging property. There was a time when up to 75 percent of bank lending was in property.”
The political fallout from the country’s decline looks to be severe. Fianna Fáil, Ireland’s largest party, has seen a massive decline in popularity since the onset of the recession. The party had been credited with Ireland’s economic growth – it is now being blamed for the fall and has plunged to third place in the polls.
“Fianna Fáil has destroyed the Irish economy,” says Tony Doody, a small-business owner and landlord in Dublin. “The world economy can’t be ignored, but they could have stopped the Irish economy from heating up.”
Outrage over the government’s handling of the crisis is growing, and protests are becoming more common. Last week, Dublin streets turned blue as an estimated 1,000 police officers – officially banned from striking – rallied to express their anger at the country’s economic policies and a sharp fall in the standard of living.
Public employees, including police, teachers, and nurses, complain that they are being asked to take a drop in living standards they can ill afford. Police officers starting their careers could lose $100 of pay each week because of the pension levy, according to a spokesperson for Ireland’s policing union. “It’s asking lower-paid workers to pay a disproportionate cost.”